BizLIVE - The Philippines is losing foreign investment to Vietnam due to rising cost and insufficient incentives.
Higher Cost Prompts Korean Firms to Leave Philippines for Vietnam
Makati city, Philippines. Photo:
Korean manufacturing companies in the Philippines are leaving the country for Vietnam where they see lower costs and an easier way of doing business, said Korean Chamber of Commerce and Industry of the Philippines President Ho Ik Lee was quoted by PhilStar as saying.
Many Korean firms in the Philippines have been complaining about the higher cost of doing business as well as lack of incentives in the country. As a result, they have started closing down their Philippine offices and operations to transfer to Vietnam, Lee said.
“We like to invest here in the manufacturing side but unfortunately, many of the Korean companies located here (are) leaving Philippines and moving to Vietnam,” he added.
One of the reasons for their leaving is the high cost, which is almost three times higher than Vietnam’s. “This higher cost is killing manufacturing and that is why the Korean companies are leaving and moving to Vietnam,” he said.
In addition, they are somewhat disappointed with the government, BOC (Bureau of Customs), and the others are also another point, he said, adding that a lack of incentives is also a factor.
Lee said the Korean companies, which are mostly in the garments and electronics sectors, have indicated “that labor intensive is no longer attractive” in the Philippines.
Lee said Korean manufacturing companies are also keen on investing in the domestic market and not only for the export market through the Philippine Economic Zone Authority (PEZA).
“But to invest in the domestic market, the government rules and regulations are tight and some limitations of the foreign share and the foreign equity. Give some more incentives,” he said.
Lee urged the country to ramp up efforts to develop its manufacturing sector in order for it to advance its economic status further.
“So I would like to draw your attention for manufacturing because so far the Philippines is very good in economy, OFW, cash inflows and BPO. But these are not more on the labor intensive industry,” he noted.
According to the Vietnamese Ministry of Planning and Investment, South Korea has stayed firm as the largest investor in Vietnam in recent years. Among 98 countries and territories investing in Vietnam in the first seven months of this year, South Korea took the lead with $5.62 billion, accounting for one fourth of committed foreign direct investment (FDI) in the period.